It is reported that Cairn India is facing some reservoir pressure problems in the Bhagyam field in Rajasthan. Despite getting all the approvals from the government for almost 11 months now, the company is unable to ramp up the entire Rajasthan production by 8%.
It can increase their production to 40,000 barrels a day from the current 20,000 barrels.
Hence it is likely that the company may announce lower guidance at its annual conference call in the third week of January while announcing it results.
The company is not able to recover as much oil from the wells as anticipated. Even with all this happening very regularly, Mr Anil Agarwal, the new owner of Cairn India Vedanta has been writing to the Prime Minister, Finance Minister asking for approvals to carry on more explorations, increase production to 300,000 barrels a day. With the current approvals, it is not able to produce 190,000 barrels a day, cumulative production from Rajasthan.
It said that a team is currently working on this and trying to fix the problem. Cairn India responded to this saying that they are trying to debottle the pipeline and they have to drill 20% more wells at Bhagyam. Also, as per the company policy and SEBI guidelines etc. the guidance maybe revised in the third week of January.
However, they guided by 2013 they will produce 240,000 barrels per day, but they are not even able to reach 190,000 barrels a day. The company didn’t anticipate this problem. They got approval to increase the Bhagyam production almost a year ago, so it is a slightly serious problem that they are working on.